Stressed mess in '04; all roads lead to home

Brent Felgner -- Home Textiles Today, January 5, 2004

New York — 2004 promises to be another head case year. Continued and magnified uncertainties over a range of stresses from basic family structures to jobs and the economy to politics, war and terrorism will continue to influence the way the industry buys and sells products, and the manner in which consumers live their lives.

Home will remain at the fulcrum.

But in the predawn of the new year, industry observers and experts agreed that this central trend will not be enough for struggling home businesses and retailers to be swept up in a wave of success. Nor will it automatically secure continued wins for the leaders.

"Home has a lot of benefits," offered Wendy Liebmann, of WSL Strategic Retail, the New York-based consultancy. "Consumers are feeling strongly about the whole notion of home — that sense of it as the center of their world.

"If you are in the home business, there is a real opportunity to catch consumers in a moment that resonates to them. It's the notion of a life well-lived."

Well-lived or not, the endless push-pull cycle of filling the pipeline with profitable home goods will be decided in a stew of countervailing market pressures, often only vaguely defined. After the macro impact of the economy and globalization, a few of those influences will be:

Continued consolidations of retailers and suppliers tempered by market entries of newer and sometimes unknown players.

A continued blurring of retail channels and a shifting of sales within those channels. On-line selling will continue to evolve and grow.

A squeeze on middle-tier retailers from both sides of the value aisle.

Reallocations of retail home textiles assortments and categories driven, in part, by disappearing or shrinking brands that often replaced by proprietary store brands.

A continued emphasis on product and retail licensing and branding, which may result in decidedly shorter product lifecycles.

"We will continue to see a retailer shift from brand emporium to more and more brand managers," said Geoff Wissman, a vp with Retail Forward in Columbus, OH. "They will look more and more like suppliers and lean toward sourcing product directly themselves. But private label will look nothing like the private brands from past. They will occupy a unique identity and position," often competing on an even footing with traditional national brands.

Wissman said brands will fall into essentially four categories: traditional national brands; exclusive or quasi-exclusive brands licensed to specific retailers; designer brands and licenses; and then the more typical retailers' private label. He cited Target's progress in building and later refining its designer brands — as well as its own — as the most compelling example.

But that trend will necessarily force manufacturers and retailers alike to assess and trash non-performers in a much more compressed time frame.

"It's a much faster world," Wissman said.

But that faster churning of home textiles shelf space — as well as of the companies themselves — will also create new opportunities, said home textiles industry consultant David Tracy.

"Most stores bought every solid color towel in the world, then found they didn't need them," he said. "They OD'd on them, and an awful lot of space was tied up in the process. Now they have an opportunity to reexamine that and do some things that can really entice and help margins on both sides — retailers and suppliers."

"[The economy] is not going to help the domestics business as much as the creative people in the industry, who must get themselves in gear and get out of the box with a passion. Retailers are looking for positive reinforcement from their suppliers."

For their part, consumers are seeking positive reinforcement from retailers — or at least shopping, said WSL's Liebmann. The entire emphasis on home, she insisted, applied just as easily to the idea of shoppers going "home" to their favorite stores — someplace where they feel empowered and safe.

"That's true if it's a 200,000-square-foot superstore or a 2,000-foot [specialty store]," she said. "Retailers can help build an environment that helps overcome our insecurities and feel safe."

But that necessarily implies consumers will also be more demanding. She argued that consumers are being much more circumspect about where to spend their money and will do at stores where they feel those qualities.

"Because so much of this appears to point to the advantage of saying 'the home business is easy — this is great.' The reality is that consumer expectations are in many ways tougher," Liebmann said. "It's not just a question of opening the doors. People really need to believe that you understand the way they feel and the way they need to create their home environment."